Press Conference on International Labour Organization Report on Least Developed Countries

Press Conference on International Labour Organization Report on Least Developed Countries

29 March 2011

Press Conference

Department of Public Information • News and Media Division • New York

Press Conference on International Labour Organization Report

on Least Developed Countries

While economic growth had increased in the 49 least developed countries over the last decade, it had not produced sufficient social or economic returns, owing to persistent structural challenges in the nature of growth, employment and decent work, said the Executive Director of the Employment Sector at the International Labour Organization (ILO) today at a Headquarters press briefing.

José Manuel Salazar-Xirinachs was in New York for the launch of the new ILO report entitled Growth, Productive Employment and Decent Work in Least Developed Countries, prepared ahead of the Fourth United Nations Conference on the Least Developed Countries, to be held in Istanbul, Turkey, from 9 to 13 May.

Joining him on a panel of speakers were: Raquel de Carvalho Oliveira, Head of the Division of Technical Cooperation in the Ministry of Labour and Employment of Brazil; Kouglo Lawson-Body, Director of Economic Policy at International Trade Union Confederation-Africa (ITUC-Africa); Sanjesh Naidu, Economic Adviser of the Pacific Islands Forum; and Norma Powell, Vice-President of the Association of Industries of Haiti.

Introducing the report, Mr. Salazar-Xirinachs said it reviewed trends in growth, employment and decent work in least developed countries and highlighted challenges and opportunities for structural transformation, job creation and poverty reduction. It offered 20 guidelines to be considered in the wider debate on how countries could better rebalance policies to help more people.

Giving an overview of the last decade, he said many least developed countries had registered progress. Nonetheless, agriculture had been neglected and had stagnated as a consequence. Exports were concentrated in a narrow range of products and services, while external shocks continued to jolt the production and export of staple commodities. Between 2000 and 2009, employment had grown at 2.9 per cent per year, which, while larger than population growth, was “much below” growth of gross domestic product (GDP). Moreover, the majority of workers — 84 per cent — were in vulnerable forms of employment that could not lift them out of poverty.

Highlighting a few specific findings, he said that a higher share of manufacturing was associated with lower volatility and better labour market outcomes. Thus, promoting growth in manufacturing carried important development effects. The policy challenge was not only to speed growth, but also the quality of that growth in terms of generating a more diversified production structure and a more socially inclusive job reach pattern of growth. “What a country produces matters”, he said.

In the area of trade, the report concluded that the benefits of trade liberalization were not automatic and that no one trade policy was optimal. Choices depended on a country’s level of development and size of the market. A lack of trade integration among least developed countries was due to a host of competitiveness and supply-side constraints, as well as non-tariff barriers they faced in export markets.

Turning to agriculture, he said the sector provided employment and income for two-thirds of the labour force in sub-Saharan Africa, for example. However, the average food production yield was half of world average. Yields had not increased much between 1960 and 2000, owing to a lack of investment in infrastructure, and in some cases, the dismantling of trade support for small farmers and too rapid trade liberalization.

In manufacturing, he said that in only four least developed countries had manufacturing accounted for more than 15 per cent of GDP in 2009: Bangladesh; Cambodia; Equatorial Guinea; and Madagascar. In 30 of 49 least developed countries, manufacturing did not exceed 10 per cent; in more than half, manufacturing’s share had fallen over the last 20 years.

In terms of “catching up”, he said the nature of a country’s capabilities — seen in its individuals, enterprises, institutions — determined options for diversifying into new products. “Today’s diversification shapes tomorrow’s products,” he said. Trade and investment policies were closely related and must be coordinated. Perhaps more importantly, education policies must be part-and-parcel of industrial development policies.

Picking up from there, Ms. Powell said it was it was no surprise that Haiti fell in to the least developed country category, with its unfortunate history of Government corruption, nepotism and neglect for policymaking, all of which had led to incoherent interventions by aid groups and non-governmental organizations. Aid programmes must be reinvented. “They simply are not working,” she said. Many projects maintained the status quo and would see only short-term success, limited to the duration of funding. Donors and national authorities must analyze reasons for the high failure rate and make better choices. “A country like Haiti cannot afford this,” she stressed.

Mr. Naidu welcomed that the report’s policy recommendations had not been designed as “silver bullets”, meaning that national priorities and circumstances would be key to shaping policy interventions. “In the Pacific, this is quite critical,” he said, as countries in that region were small, isolated and vulnerable to both natural disasters and external commodity shocks. He welcomed the recommendation to harness better returns from natural resource endowments.

Rounding out the discussion, Mr. Lawson-Body stressed the report’s finding thatgrowth alone was not a solution for Africa; it must be complemented by decent work. State action was also vital, as were social protections, which was why trade union capacity should be expanded.

When the floor was opened to questions, Mr. Salazar-Xirinachs said the guidelines should not be seen as a closed package, but rather as a portfolio of areas for analysis. Country priorities must be identified in order to tailor the recommendations to various needs. “We recognize there is a lot of diversity in these countries which must translate into policy diversity.” No mechanism had been created to monitor all 49 countries, however, he stressed that country statistics collection was essential for policy implementation.

Asked why only $3.4 million of $260 million allocated for reconstruction in Haiti had gone to Haitian firms, Ms. Powell said projects today were focused on infrastructure. The Interim Commission for the Reconstruction of Haiti (IHRC) did not undertake small projects. Reconstruction involved major infrastructure projects.

As to whether ILO considered the situation in occupied territories like the West Bank and Gaza, Mr. Salazar-Xirinachs said that the situation in Gaza had been considered in various reports and that the organization often reported back to its governing bodies on such matters.

Fielding a query on a critique of the ILO by the United Kingdom, Mr. Salazar-Xirinachs said a press release and another document outlined the organization’s position on the United Kingdom’s comments. He had some doubts about the critique, as it was based on only a few projects in a few countries and did not reflect the organization’s effectiveness. Other assessments had been positive.

Asked for examples of South-South cooperation in the area of sustainable employment, Ms. de Carvalho Oliveira said many countries had asked Brazil for guidance. Her country had worked with Sao Tome Principe, for example, in developing a minimum wage policy. Minimum wage policies had helped Brazil weather the global financial crisis.

Answering a final question, Mr. Salazar-Xirinachs, referring to the three countries that had graduated from least developed country status, said: “We would all like to see a bigger rate of graduation,” as that would mean incomes were increasing. “In a way, this is like being trapped in a vicious circle.” Countries had not been able to generate enough jobs, which was why the report and upcoming conference were so important.

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For information media • not an official record

For information media. Not an official record.

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